Liverpool made 9 changes to the midweek side with an eye on the upcoming Chelsea game, but the players failed to deliver in another hugely disappointing game - Liverpool's third Anfield defeat in 8 days.
Swansea, Southampton and Wolves have enjoyed a horrific run of Liverpool form to dent the reds hopes in the Premier League and end their involvement in both domestic cup competitions.
The reds were on the back foot within the 1st minute when Wolves grabbed an early goal in front of The Kop.
Richard Stearman rising to head in Helder Costa's free kick with just 55 seconds on the clock.
Liverpool huffed and puffed throughout the first half, dominant possession but without creating any real chances - they just couldn't break through Wolves' defensive rearguard.
Towards the end of the half and Wolves added a second. Helder Costa again on hand to quickly move the counter attack - playing the ball through into the path of Andreas Weimann who could take it around the keeper and put it into the empty net.
There were some boos at half time but louder cheers at the start of the second as the crowd urged the reds to get back into the tie.
Coutinho came on for the second half, Sturridge for the last half hour and Emre Can for the final 10 minutes. But it was all in vain.
Liverpool managed their first shot on target just before the 60 minute mark - but Coutinho's shot had little to power and the goalkeeper collected with ease.
The reds woke up with 5 minutes to go as Origi poked home a goal to give Liverpool an outside chance of snatching a draw but it was too little too late.
Wolves enjoy their second defeat over a Premier League side in the competition this season but the reds must lick their wounds and prepare for a visit from the runaway Premier League leaders.
Massive disappointment. There were enough senior first team players there to win that – it wasn’t a hugely inexperienced team. Liverpool players seem to have lost all their confidence which is bizarre because they were top of the league and flying not so long ago.